Final offers to buy CanWest’s newspapers are starting to filter in, but in a twist, the highest bidder won’t necessarily walk away owning Canada’s largest chain of dailies. Instead, cash will be king.

The 46 newspapers are being sold off by creditors that include the country’s major banks, which are looking to recoup $950-million owed to them by financially strapped CanWest Global Communications Corp.

As they enter the final stage of the sale, the banks are hunting for cash – even if it means passing on offers that are higher on paper but involve the banks not getting all their money right away, or staying on as creditors.

Sources indicate a bid that includes newspaper owner Torstar Corp. is now emerging as a favourite, since it is expected to involve more cash than other offers.

The publisher of the Toronto Star and 97 other Ontario papers is backed by the deep pockets of Fairfax Financial Holdings Ltd., which owns 19 per cent of Torstar.

Torstar would come aboard as the operator of the CanWest papers, but would limit its exposure by contributing a relatively small amount of its own money, while relying on the financial muscle of Fairfax, the insurance company headed by Prem Watsa.

Among the CanWest assets, Torstar is believed to covet the Financial Post to bolster its flagship paper, the Star.

If that last sentence is true, I’m guessing Torstar sees the F-P as a profitable entity. I’m also guessing that the National Post wouldn’t be long for this world no matter who buys these newspapers — unless it’s the Leonard Asper-led group.

The other CanWest print assets would fit nicely into the Torstar stable.

However, the question then becomes this: Does it make strategic sense to make a huge bet on newspapers at a time when the shift to digital is hurting the print business model?

How much cash does Torstar have? The Aspers spent billions to acquire newspaper properties from Conrad Black’s Hollinger Inc. back in 2000. Most of that money was borrowed.

I would argue that set CanWest on its path of destruction with that deal. Is there a lesson in that for Torstar?

Blame for the problems that forced CanWest into creditor protection in October is typically laid at the feet of Izzy Asper. The patriarch’s single-minded drive to create a national media powerhouse led to the purchase of Hollinger Inc.’s newspapers from Conrad Black in 2000. The debt from the peak-of-the-market price—$3.5 billion—outlived Izzy, who died in 2003. Defenders of Leonard Asper ask what the now 45-year-old son possibly could have done to avoid his company’s fall.

Quite a lot, actually. What is almost always overlooked in CanWest post-mortems is that Asper missed three critical chances to save his company over a three-year period.

So maybe if Torstar’s financial minds are smarter than the Aspers’ financial minds, it won’t be so bad. :)